#1Expanding Sri Lanka's Exports under the GSP Program Meredith Broadbent Office of the U.S. Trade Representative Executive Office of the President#2Today's presentation ■ Purpose: increase U.S. imports from Sri Lanka How: one way is to increase Sri Lanka's participation in the GSP program ■ Why: Before: exporter obtained Form A to verify product met GSP rules of origin & eligibility Today: producer and exporter must educate the U.S. importer to request GSP duty-free treatment (Form A no longer used by U.S. Customs) 2#3Presentation Overview ■■U.S. Generalized System of Preferences (GSP) Program: purposes, benefits, and operation U.S. imports from Sri Lanka under GSP ■■Using the U.S. GSP program Increasing Sri Lanka's export opportunities 3#4GSP Program: Purposes Created by Congress in 1974 ■ Provides temporary, unilateral tariff preferences to developing countries Seeks to integrate beneficiary countries into world trading system Targets benefits to those countries and products that are not yet competitive in the world market ■Includes protections for import-sensitive domestic industries 4#5GSP Program: Benefits ■Duty-free treatment for imports from 131 countries (43 LDCs) ■Imports are more competitively priced in U.S. market; lower costs for U.S. industry and consumers ■Major U.S. import program: $32.6 billion in 2006; up 22% over 2005 5#6How many products are eligible for GSP duty-free treatment? Duty-free imports from all countries 3,879 products: 36.9% Ineligible for GSP 1,809 products: 17.2% GSP-eligible imports (LDCs ONLY) 1,413 products: 13.4% GSP-eligible imports (all), 3,406 products: 32.4% 00#7Products NOT eligible for GSP ■Most textile and apparel articles Most watches Footwear, handbags, and luggage ■■Flat goods (kitchen and bed linens) ■■ Work gloves ■Most leather wearing apparel Import-sensitive electronic, steel, and semi- manufactured and manufactured glass products 7#8Types of U.S. imports that received GSP duty-free treatment in 2006 Machinery, Electronics, Transportation, 20% Agriculture, 6% Chemicals, Plastics, Paper, 15% Base Metals and Articles, 12% Jewelry and Glassware, 17% Textiles and Apparel, 3% Fuels, 27% 8#9U.S. Imports from Sri Lanka Under GSP in 2006 14th top user of GSP benefits ■ $143.6 million (up 4.4% from 2005) GSP: 6.8% of $2.1 billion total imports ■160 (4.7%) of 3406 GSP-eligible product types* Importers saved $5.7 million in duties * U.S. importers did not claim GSP duty-free treatment for an additional 35 GSP-eligible product types 9#10Top U.S. Imports from Sri Lanka (by trade) under GSP (YTD 8/07) ■Rubber tires: $27 million (3.4% duty) ■■ Plastic sacks & bags: $13 million (3%) ■■Rubber gloves: $11.7 million (3%) Activated carbon: $8.4 million (4.8%) ■ Weighing machine weights: $4.5 million (2.8%) ■ Gold jewelry: $3.4 million (5.5%) ■ Porcelain/china household ware: $3.4m (6-8%) Rubber floor coverings: $2.7million (2.7%) 10#11Top U.S. imports from Sri Lanka by duties saved Porcelain/china kitchenware in sets not over $56: 26% duty Silk blend ponytail ties & headbands: 14.6% duty (42% of all imports not claimed under GSP) Silver & imitation jewelry: 11-13.5% duty ■ Gemstones: 10% ■ Brooms & brushes of twigs or vegetable materials: 10% National flags: 7% (54% of imports not claimed) 11#12Competitive Need Limitations ■ 2007: $130 million annual trade or more than 50% of all U.S. imports of that item Petitioned waiver? Not yet necessary ■De minimis waiver (annual): when total U.S. imports of a product from all countries are under $18.5 million (2007) - - Automatically considered but President has discretion to grant Public comments accepted in late February after full-year 2007 data available and after issuance of a Federal Register notice Sri Lanka: currently has a de minimis waiver for 9603.10.90 - brooms & brushes of twigs or vegetable materials ($1m in trade YTD 2007, but 54% market share) 12#13How to qualify for duty-free treatment under GSP (1) Product must be included in U.S. tariff list of GSP-eligible articles (and not excluded from Sri Lanka). Look for the "A" or "A*” in the far right column ----------| 6307.90.75 00 Toys for pets, of textile materials No. 4.3% kg 6307.90.85 00 Wall banners, of man-made fibers kg 5.8% 1/ Free (BH,CA, CL,E*,IL, J*,JO, MX, P,SG) 1.8% (MA) 3% (AU) Free (A,BH,CA, CL,E,IL,J, CL,IL,JO, MX, P.SG) 13#14How to qualify for duty-free treatment under GSP (2) Product must be imported directly from Sri Lanka or pass through another country on a "through bill of lading" (19 CFR 10.175) *Shows that export has been sold and placed for through shipment to the United States 14#1535% value-added requirement ■■ Cost of Sri Lankan inputs and labor must equal 35% of product's price when sold To count toward that 35%, imported inputs must be “substantially transformed" in Sri Lanka and then used to help produce or manufacture item "Substantially transformed” means that the item's name, character, or use differs from when it was imported 15#16Agricultural exports ■ Ensure products are free from microbial contamination, foreign material, pests, diseases, and chemical residues Must comply with USDA or FDA requirements Care must be taken during each step: Production - Packing – Shipping (fresh products) - - Production - Processing - Packaging – Packing - Shipping (processed products) 16#17Producer required to keep these records for five years Verification of 35 percent rule-of-origin: Dated invoices for materials used to produce good and from where - - Description of product, quantity, and costs If processing operations are involved: - - - Description of processing and location · Direct costs of processing operations ■ For agricultural exports: - - 1 Producer's statement verifying on which farm and town the product is grown - Description of product and quantity · Dated invoices for costs incurred 17 15#18Claiming GSP duty-free treatment ■ Exporter no longer needs to submit Form A but needs to tell the importer that the... ■ Importer MUST REQUEST GSP duty- free treatment for each qualified item ■ GSP treatment is NOT automatic Write an "A" before the tariff number on Customs entry form 7501 18#19Claiming GSP on Entry Form 7501 The U.S. importer must place an "A" in column 27, in front of the tariff number 05-1. - 10.59 12. Fran-ade Capia e DEPARTMENT OF HOMELAND SECURITY U.S. Customs and Border Protection ENTRY SUMMARY importing Camer 2023441000 1. Her CodeEntry No AWC 000 187 > 00/002 F-36 2. Entry Type 01 ABI/A 1. Sudy No 5. Bond Type 8. Port Code TR 14. Expoiling Cou TR 8 -Mode of Transport 11 10. Country of Urban 13. Manufacturer E 16. I.T. No. *T. I.T. De 16 in Does 21. Lesallon of Good.D. No. 22 Donalance No. SAME 25. Udate Consignee Names Ket Quarryin 1B Foreign Port of Lading 55735 23. Importer Na 28 Wed 2704 C. IRC Roto Q. Wee No. 13. Sumery O 10/04/2006 Enly the 03/24/2006 11. Import Cate 09/24/2006 16. Cal 03/30/2006 20 US. Portal Lading 2704 24. Refere58 Na 2700 CABES Gly IN Zip City SELE TR 82. &. 27. 29. Description of Merchan 33. 31. Line A. HTSUS Ne A Grose Weight A. Fred Value B. CHGS A. HTSUS Rate BADYCVD Rale Duty P.R. T.m Dora CLITO На B. ADIOVO CR No. D. Manifestly. KTSUS C. Relallondilp 465000914 BOSCER1365LY NOT RELATED A DISPOSES SEAMLES RUBBER GL 4015.19.1010 16940 112500 DPR 51E10 FREE €3959 0.00 HARBOR MAINTENANCE FEE MERCHANDISE PROCESSING FEE 0.1257 0.21% €4.00 08,85 AS ENTERED .כ נו50! D INVOICE 00001 TOTALS 97.Out Giner Fee Summary: Dock *** 4: 34 Total Entered Value 51,640.00 CBP USE ONLY SODE B. Acceled Duty Told Other Fet 55 REASON CODE C.Ascertained a 32. Tad 173.66 D. Ascertained Ciner 99.h sejle 173.56 E. A&certamed Taa: 40. Toli 173.60 DR. Owner 3G DECLARATION OF IMPORTER OF RECORD (CWNER OR PURCHASER) OR AUTHORIZED AGENT I declothal | em the pate of recard and that the under, or bonsign for CCP N 12hown C Offer dedery that the merchand was resoned purpurgament tapas Tre panforth in Ilia invelestra tra OR was not purpurement to purchas topca pre truths bawda and belief. I also decies that the sheets in Auchenfully disclose to of my rowledge and bue prices, values, quantiles, rates, hacks. fcos.com, wyland and cond goods or saves provided to the neler of the marchandise ele Nduoad coal are lully died. will-Iramedicely Limbah to the appropriate CAP 41. DECLARANT NAME Information show directly f TITLE Informelles (Sams, address, phone number) 14 Brokerkartporter File No. 6841 10/12/2006 BILATE RECORD CBP Form 901 (04:05) 19#20How to increase imports under GSP from Sri Lanka Ensure Customs forms are properly marked to avoid paying duties. Increase exports of GSP-eligible textile and apparel products. ■ Export certified handicrafts and other artisanal items Identify Sri Lanka's exports to other countries that are GSP-eligible Cumulate within SAARC 20 20#21Ensure GSP-eligible products get GSP duty-free treatment $111.7m of GSP-eligible imports from Sri Lanka from YTD 2007 (Aug) ■89% of these imports entered duty-free Sri Lankan businesses and their U.S. importers could have saved an additional $480,000 in duties assessed on $12 million of Sri Lankan GSP-eligible exports (that were not claimed under GSP) 21#22Extra Duties Paid on... ■ $2.75 million in rubber gaskets and seals (2.5% tariff = $69,000 duties paid) $2.6 million in plastic hangars (3% tariff = $78,000 duties paid) $1.2 million in national flags (7% tariff = $82,000 duties paid) 22 22#23Low rate of GSP claims for: — - - - - - - Headbands & ponytail holders: 14.6% duty Gemstones and silver and imitation jewelry: 5%-11% Porcelain, china and ceramic products: 6%-9.8% National flags: 7% Women's silk blend dresses: 6.9% Exercise/sports equipment and apparel: 2.8%-5.5% Products of plastics: 3%-5.3% Fishing casts, line and hooks: 4.8% - Activated carbon: 4.8% — - Optical and measuring instruments: 1.7-4.5% Products of rubber: 2.5%-4% - Music boxes: 3.2% - - Parachutes: 3% Coconuts: 1% 23 23#24Untapped Textile and Apparel Opportunities under GSP ■ Jan-Sept 2007 imports: - – $4.8m in hats, silk blend headbands, headgear, national flags, wall hangings, sports gloves – tariff savings: up to 14.6% but $1.6m (33%) not claimed under GSP Untapped potential: - - Silk and silk blend: fabrics, shawls, women's and men's apparel, handkerchiefs, kitchen linen Other: carpets, apparel and accessories of plastic 24 24#25Handmade, Folkloric Crafts and Home Decor Use GSP certified handicraft arrangement (wall hangings, cushion covers) Other artisanal items that can enter duty-free (GSP or MFN) - - - - - - games, racket strings, and cotton hammocks paintings, sculpture, and wall hangings many types of carpets, kilims, tapestries and rugs wooden furniture, statuettes, boxes, and picture frames walking sticks wind, string, and drum musical instruments 25 25#26Export more of Sri Lanka's GSP- eligible exports to the U.S. ■ Marble ■ Walnuts, mixtures of dried fruits and nuts, natural gums, dried lentils Candies and food preparations Fish, shrimp, crab, and other shellfish ■■ Jewelry of all types; cut gemstones Green tea and spices Electrical machinery & equipment 26 26#27Special provisions for regional associations The South Asian Association for Regional Cooperation (SAARC) is recognized as a regional association under GSP Means that SAARC is considered as one country for purposes of the GSP rules of origin ■ Articles produced in two or more eligible member countries of SAARC are given GSP duty-free treatment if the countries together meet the rules of origin (in terms of a non- SAARC member) 27 21#28Opportunity for Sri Lanka and LDCs in SAARC to work together Cumulation of production can occur between Sri Lanka and a least-developed SAARC member to produce an item eligible for duty-free treatment only from least-developed GSP beneficiaries, as long as the article is imported directly by the United States from the least-developed beneficiary Least-developed SAARC beneficiaries under GSP: Afghanistan, Bangladesh, and Nepal (Note: the Maldives is not a GSP beneficiary so is not eligible for cumulation within SAARC) 28 28#29For Additional Information Office of the U.S. Trade Representative Website GSP guidebook, GSP-eligible & ineligible products, notices http://www.ustr.gov/Trade Development/Preference Pr ograms/GSP/Section Index.html Agricultural Export Requirements http://www.fas.usda.gov/itp/ofsts/SPS.html http://www.fsis.usda.gov/regulations & policies/port of entry procedures/index.asp 29 29#30USTR Website: 2007 GSP- Eligible Products 2007 GSP-Eligible GSP Products in 2007 HTS including LDBDCs GSP Products in 2007-BDCs only Products GSP Eligible Textile and Apparel Products 2007 GFP Eligible Carpets 2007 Non-GSP-Eligible Products in 2007 GSP-Eligible Agriculture Products 2007 Handicraft Items List 2007 (MFN Duty- Free, GSP-eligible and Dutiable) 30 30#31For Additional Information U.S. Tariff Schedule — http://www.usitc.gov/tata/hts Department of Homeland Security: Customs & Border Protection http://www.customs.gov/xp/cgov/import/ ■ Customs Entry Form 7501: https://forms.customs.gov/customsrf/getform harness.asp?formName=cf-7501-form.xft ■ http://www.customs.treas.gov/xp/cgov/toolbo x/ publications/ 31#32Sthuthi! 32 22